Ethyl Corp.s board of directors has asked shareholders to approve a holding company structure. Ethyl would become a wholly owned subsidiary of the new holding company, NewMarket Corp. A spokesman said the move would allow Ethyl to better manage its two main operations and would lead to a new name for its lubricant additives business.
Sales of petroleum additives for lubricants and fuels account for more than 90 percent of Ethyls revenue. The company reports much less revenue but earns significant profits from sales of tetraethyl lead.
We believe these businesses would each operate better under their own management, spokesman David Fiorenza said. So after this change is made, well have a holding company with two subsidiaries. The tetraethyl lead business will keep the Ethyl name, and the petroleum additives business will have a new name, which has not yet been chosen.
The recommendation, made by directors March 5, will be presented to shareholders at the companys annual meeting, which is tentatively scheduled for late May. The plan calls for Ethyl shareholders to exchange their shares for stock in the holding company, NewMarket Corp., which would trade on the New York Stock Exchange under the symbol NEU.
The conversion of Ethyl stock to NewMarket stock would be tax-free, and shareholders would not incur a gain or loss. Ethyl, which is based in Richmond, Va., has already incorporated NewMarket in its home state and registered it with the U.S. Securities and Exchange Commission.
Fiorenza said the change would also better position the company for joint ventures and acquisitions. No deals are imminent, he said, but management is ready to begin reinvesting in the company after working the past few years to lower debt and restructure. Ethyl had $641 million in debt in 1997 but had reduced the level to $209 million by the end of last year.
In the long term – maybe four or five years down the road – this change might position both subsidiaries to be more flexible in those kinds of activities, he said.